(Yicai Global) Oct. 17 -- China’s securities regulator is considering making it easier for listed companies to repurchase their own shares, according to a recent draft policy. Share buybacks are often conducted by firms to shore up a sliding stock price and boost investor confidence.

Companies whose stock loses 25 percent in value over 20 consecutive trading days could be permitted to buy back shares, as opposed to the previous 30 percent, according to a policy proposal released by the China Securities Regulatory Commission on Oct. 14. And newly listed firms will be able to buy back their own shares six months after listing, rather than the previous one year.

Share repurchases play an important role in optimizing capital structure, enhancing the value of the company and improving investor returns, the CSRC said.

The new rules will also shorten the time period around ‘information-sensitive’ periods, such as the days leading up to the release of performance reports and earnings forecasts, when companies and their executives are prohibited from buying back shares, to five days from the previous 15 days for companies and 10 days for executives, it said.

Share buyback rules, which are in place to safeguard the company’s value and shareholders rights and interests, started to become more relaxed after 2018, and as a result an increasing number of companies are repurchasing their own stock.

Over 500 firms listed on the Shanghai and Shenzhen bourses have bought back CNY100 billion (USD13.9 billion) worth of shares since the beginning of the year, 20 of which repurchased over CNY1 billion (USD139 million) each.

And from 2019 to the end of September 2022, some 1,195 companies conducted CNY360 billion (USD50 billion) worth of share repurchases in Shanghai and Shenzhen.

Editor: Kim Taylor